TOUR TRAVEL MANAGEMENT 1.
Active Listening – you can be active by your
“PRELIM”
WHAT DOES THE TRAVEL AGENT DO?
- Being polite and friendly
TYPES OF COSTUMERS
LEISURE - Travelers are customers who may want to travel.
However, they may also use their disposable income to
buy other products or services. Hence, the role of a travel
agent is to turn a prospective leisure traveler into a client.
For leisure travelers, budget is an important factor when
deciding.
BUSINESS TRAVELERS - on the other hand must travel and
time is of the essence-they want efficient and effective
attention to their needs.
WHAT IS THE PURPOSE OF TRAVEL AGENCY?
- to be “attentive and responsive”
IMPORTANCE OF CUSTOMER SERVICE COMPARED WITH
OTHER INDUSTRIES
 The travel agents’ success is based upon selling
an abstract product
 This role is challenging—to respond
professionally so customers will return and bring,
or recommend, friends and relatives.
CUSTOMERS ARE:
1. The most important persons in any organizations
2. Not dependent on us; we are dependent on
them
3. Not an interruption of our work, the purpose of
it
4. Doing us a favor by asking for our help; we are
not doing them a favor by providing service
5. Not outsiders to our organizations; they are part
of it
6. Not cold statistics: they have feelings and
emotions
7. Not persons with whom to argue or match wits
8. Persons who have needs; our job is to respond to
them
9. Persons who deserve courteous and attentive
treatment
10. The purpose of our work; they are the persons
who account for our income; without them, our
business would suffer
11. The lifeblood of every organization
FOUR COMPONENTS
A – ACKNOWLEDGE
a.
V – VALIDATE
b.
I – IDENTIFY
P – PROVIDE
body language (non-verbal_ and by speaking
(verbal)
2. Selective Listening – you can select facts that
appear more appropriate, and ask questions to
Obtain
3. Responsive Listening – this allows you to
demonstrate empathy, care and interest. Use
paraphrasing to assure your understanding of
the situation.
THE PHILIPPINE TOURISM INDUSTRY
- The tourism industry is a composite of industries
and entities, both public and private, involved in
the planning.
THE GOVERNMENT SECTOR
- The government sector of the tourism industry is
responsible for the formulation of tourism
policies, plans and programs.
The five (5) government agencies directly involved in
the tourism industry are:
1. the Department of Tourism (DOT)
2. the Philippine Tourism Promotions Board (PTPB)
3. the Tourism Infrastructure and Enterprise Zone
Authority (TIEZA)
4. the Duty-Free Philippines Corporation (DFPC)
5. the Municipal, City and Provincial Local
Government Units (LGUs)
THE DEPARTMENT OF TOURISM
- Was recognized into its former set-up by
Executive Order No. 120, in accordance with
Article II, Section I and Article III of the Freedom
Constitution of 1986s. The Department of
Tourism is recognized into its present set-up in
accordance with Section 107 of Republic Act
9593, otherwise known as the Tourism Act of
2009, and the promulgation of its Implementing
Rule and Regulations (IRR) as published in
November 2009.
Tourism Development
- The undersecretary for Tourism Development is
responsible for the Office of Product
Development, the Office of Tourism
Development, Planning, Research and
Information Management and the Office of
Industry Manpower Development.
The Office of Product Development has the following
functions:
Conceptualize and develop new products which will
enhance tourism sites and facilities.
Undertake tests on the viability and acceptability of
new tourism-related products and programs.
 c. Encourage and promote joint undertakings with the
private sector of new tourism-related products and
programs
The Office of Product Development has two
divisions, namely:
 Product Planning and Development Division
 Product Monitoring and Evaluation Division
The Office of Tourism Development Planning Research
and Information Management
a. Preparation a National Tourism Development
Plan that identifies geographical areas with
potential tourism value and outlining approaches
to develop such areas
b. Formulate, monitor, and evaluate policies and
programs for global competitiveness and
national tourism development and approve LGU
tourism development plans; and coordinate with
other government agencies, LGUs, NGOs, and
other private sector entities the development
and implementation of the national tourism
plans and policies and other relevant concerns
c. Provide the TIEZA, the LGUs and other
government agencies with technical assistance in
the preparation of tourism development plans
d. Formulate an integrated marketing and
promotions plan, source grants, manage the
Department’s information system and pursue
the Department’s interest in all treaties and
agreements
Its four divisions are:
 Statistics, Economics Analysis, and Information
Management Division
 Tourism Development Planning Division
 . International Relations Division
 Information Technology Division
The Office of Industry Manpower Development the
following functions:
a. Develop training modules and conduct multi-
skills training seminars including continuing
education programs for the industry manpower
in coordination with the appropriate
government agencies and tourism enterprises
and associations
b. Develop training courses and apprenticeships
programs in coordination with the Office of
Tourism Standards and Regulation, for tour
guides and other similar workers jointly with
appropriate government agencies and the
private sector
c. Enlist the participation of experts for the training
and education programs of the LGU
d. Develop, in conjunction with the Technical
Education and Skills Development Authority
(TESDA), programs for the training and
certification of tourism professions
Its two divisions are:
 Manpower Planning and Monitoring
Divisions
 Manpower Training Division
The Office of Tourism Standards and Regulations has the
following functions:
a. Formulate and enforce standards for the
operation and maintenance of tourism
enterprises prescribing minimum and
progressive levels of operating quality and
deficiency consistent with local and international
standards
b. Coordinate with relevant tourism enterprises
associations in the formulation and enforcement
of the rules and regulations for the accreditation
of tourism enterprises
c. Develop and enforce a comprehensive system
for mandatory accreditation for primary tourism
enterprises and voluntary accreditation for
secondary enterprises, in accordance with
prescribed guidelines and standards
d. Establish a system of registration, information,
linkage, and mutual assistance among accredited
tourism enterprises to enhance the value of
accreditation and improve the quality of service
rendered by such enterprises
e. Evaluate tourism projects in accordance with
standards and endorse the same to appropriate
government agencies
The Office of Tourism Standards and Regulations has
three (3) divisions, namely:
 1. Standards Development Division
 2. Standards Monitoring and Enforcement
Division
 3. Project and Investment Evaluation Division
The Office of Tourism Coordination has the following
functions:
a. Maintain close coordination with national
government agencies, LGU, NGO and other
private entities for the development and
implementation of national tourism plans and
policies
b. Call upon the assistance and support of any or all
of the government agencies in the
implementation of the policies of the
Department
c. Support the private sector in all tourism activities
requiring government coordination
Its divisions are:
 Government Coordination Division
 Industry and Media Coordination Division
The Office of Resource Generation has the following
functions:
 Ensure a sustainable funding mechanism for the
implementation of tourism plans, policies,
programs, and activities of the Department and
attached agencies
 Establish the Tourism Development Fund and
formulate guidelines, rules, and regulations for
its equitable allocation among projects relating
to the development and promotion of tourism
 Collect tourism charges and fees as may be
deemed necessary in relation to the mandate of
the Department
Its divisions are:
 Revenue Research Division
 Revenue Collection Division
The Regional Offices are headed by a regional director
and have three (3) operating units:
 Tourism Planning
 Tourism Regulations
 Administration
The Office for Administrative Affairs functions are as
follows:
a. Advise and assist the Secretary on all matters
pertaining to personnel and general services
b. Provide the Department with centralized and
integrated services relating to personnel
information, work environment, records,
communications, supplies, equipment,
collection, disbursement, security, and other
custodial work
Its divisions are:
 Human Resources Divisions
 General Service Division
The Office for Legal Affairs has functions:
a. Advise and assist the Secretary on all legal
matters involving the Department
b. Review and finalize all issuance, circulars and
rules and regulations to be promulgated by the
Department, as well as all legislative instruments
to which the Department is a party
c. Hear, investigate, and adjudicate administrative
cases involving employees of the Department
d. Coordinate with relevant agencies on legal
concerns affecting the Department
e. Organize and conduct workshops, seminars, and
similar trainings on legal procedures for the
Department and its employees
Its divisions are as follows:
 Legislation, Research and Documentation
Division
 Administrative Investigation, Adjudication and
Counseling Division
The Office for Financial and Management Services
functions are as follows:
 Advise and assist the Secretary on budgetary,
financial and management matters
 Assist the Secretary, together the Office of
Tourism Development Planning, Research, and
Information Management, in the review of
budget proposals of the attached agencies to
ascertain consistency with the Department’s
priorities
 Organize technical budget hearings in
coordination with the Office of Tourism
Development Planning, Research, and
Information Management, of the budget
proposals of various operating units and organize
workshops and training for regional accountants
and budget officers on latest budgeting,
accounting and auditing systems, procedures,
rules and regulations
Its divisions are:
 Budget Division
 Accounting Division
 Management Division
In addition to the above, there are two other
specialized units of the Department, namely:
1. Internal Audit Service
2. Legislative Liaison Unit
Attached Agencies of the Department of Tourism
- Implementing Rule and Regulations (IRR) of
Republic Act 9593, otherwise known as the
Tourism Act of 2009, as published in November
of 2009, deals with the attached agencies of the
Department in Chapter III, Section 29 which are
under its supervision. These are:
 Philippine Tourism Promotions Board (PTPB)
 Tourism Infrastructure and Enterprise Zone
Authority (TIEZA)
 Duty Free Philippines Corporation (DFPC)
Plus, all other former attached agencies:
 Intramuros Administration (IA)
 National Parks Development Committee (NPDC)
 Nayong Pilipino Foundation (NPF)
 Philippine Retirement Authority (PRA)
 Philippine Commission on Sports and Scuba
Diving (PCSSD)
THE PRIVATE SECTOR
In the private sector, the six (6) principal industries
directly involved in tourism are:
 The Transportation Industry (air, sea, land)
 The Lodging Industry or holster industry (hotels,
resorts, inns, motels, lodging/pension houses,
apartment-hotels)
 Food & Beverage (restaurants, disco, travel food
service and institutional food service)
 The Activities and Attractions Industry or
entertainment industry (museums, theaters,
theme parks, adventure or clubs, dive shops)
 The Travel Trade (travel agents, tour operators
and tour guides)
 Other Private Sector Entities
The Transportation Industry
 The transportation sector, specifically passenger
transportation or passage, plays the most
important role in the industry, since without
travel, there is no tourism.
The Lodging Industry
 hostelry sector is made up hotels, resorts, motor
hotels, pension houses, dormitories, and inns.
These are establishments primarily engaged in
providing lodging or lodging with meals to the
public.
The Food & Beverage Industry
 The food and beverage would face difficult times
without the tourism market. The food and
beverage industry or F&B for short, consists of
restaurants, travel food service and vending and
contract institutional food service.
The Attraction and Activities Industry
 also referred to as the entertainment, recreation
or leisure sector which is best exemplified by
theme parks, such as Enchanted Kingdom and
Ocean Park and the shopping malls, night clubs,
restaurants and the like.
The Travel Trade
 The travel trade is made up of a travel managers
and tour operators, also referred to as
intermediaries or middlemen and the tour
guides.
Travel Manager – is a seller of travel supplies/ products
and services. A travel manager provides information, gives
expert advice, and plans to travel by air, sea, or land to any
point in the world
Tour Operator – contracts and purchases the separate
travel components the suppliers or vendors and assembles
them into one package, which he/she sells to the travelers
through the travel managers
The Other Private Sector Entities
 The other private sector entities include the
members of the media, be it print, broadcast,
audio-visual or electronic. The media plays an
important role in the tourism industry as they
perform the task of “image making”, in addition
to the marketing aspects of media. The other
entities are.
 Publishing Companies
 ITC Service Providers
 Marketing and Public Relations Organizations
 Event Organizers
 Social Media Sites
 Miscellaneous Services
TRAVEL MANAGEMENT COMPANIES
 A travel management company (TMC) can be
defined as “an entity engaged in arranging and
selling transportation, accommodations, tours,
and trips for travelers.
The Traditional Way
 the TMC acts as a middleman between the
vendor and the vender. The vender
communities with the middlemen, and the
middlemen communicates with the vendor
and vice-versa. The vendor and the vender
do not communicate with each other.
The New Way
 the new way of doing business by harnessing the
available technology, expanding the travel
industry linkages with the expertise and
professional service orientation of the
organization and evolves into a principal and
vendor of travel solutions.
The Travel Agent and the Internet
 the internet is providing an alternative to the
different GDS, for off-the-beaten track product
and properties. On-line booking for passage,
lodging and other travel components are nothing
new to the travel agent, but are new to the
travelling public.
The Changing Role of Travel Agencies
 Travel Agents need to play the role of counselors
and provide information that is specific to the
client’s needs.
Paradigm Shift—From Agents to Principals
 Steve Lohr wrote that “playing the middleman
role on the Internet is going to be a tricky way to
make a living. The essence of the Internet, after
all, is that it enables people and business to
connect directly sidestepping intermediaries like
distributors and retailers and there lies the
challenge.
Setting-up a TMC
 A TMC like any other commercial enterprise
doing business in the Philippines requires a legal
personality before it can transact legitimate
business. There are three (3) types of business
establishments in this country: Sole or Single
Proprietorship, Partnership and Corporation.
 A single individual owns a Sole or Single
Proprietorship business establishment. In terms
of initial documentation from the Bureau of
Domestic Trade Registration the requirements
are:
 Trade Name Registration
 Bank Certificate for the company’s capitalization
 Tax Identification Number of the owner
 A Partnership on the other hand, is owned by at
least (2) individuals. The initial documentary
requirements are the same as the Single or sole
proprietorship.
 The Corporation is the most common entity of a
business set-up for TMCs. It requires a minimum
of five (5) investors.
DEPARTMENT OF TOURISM (DOT) ACCREDITATION
- The DOT Accreditation is a certificate issued to
document that an establishment has complied
with the department’s minimum standards of its
operations to ensure the comfort and
convenience of its clients.
The following may apply for accreditation as tour
operator:
 A resident Filipino citizens
 A partnership organized under the laws of the
Philippines, at least 60% of its capital being
owned by Filipino citizens
 Corporations organized under the laws of the
Philippines, at least 60% of the subscribed
common or voting shares of stocks of which is
owned by Filipino citizens and the composition
of its Board of Directors being at least 60%
Filipinos
STEPS IN APPLYING ON-LINE (New Application)
 Register an Account
 Pay the Required Fee
 Accomplish the Application Form
 Submit the Accomplished Application Form
 Submit the Accomplished Form
 Claim Accreditation
STEPS IN APPLYING ONLINE (Renewal)
 Apply for Renewal
 Pay the Required Fee
 Accomplish the Application Form
 Submit the Accomplished Application Form
 Claim Accreditation
Functions of TMC
A TMC’s five (5) main functions are
 Provide information and expertise
 Recommend destinations, products, and services
best suited to the needs of client
 Processes travel arrangements
 Provides assistance in securing travel documents
 Assists in cases of refunds and cancellations
ADMINISTRATIVE DEPARTMENT
 This department is common to all commercial
enterprises and business entities and is
necessary for the conduct of the day-to-day
business activities pertaining to its management.
The department has four (4) functions, as explained in the
following sections:
o General Administration
o Personnel
o Accounting
o Finance
MARKETING & SALES DEPARTMENT
 This department’s functional activities are
divided into marketing and sales – sales are
either at the counter (for walk-in clients) or field
sales (for corporate accounts).
OPERATIONS DEPARTMENT
 The Operations Department is the core of the
TMC/travel agency business. It is primarily
engaged in the efficient and effective delivery of
the organization’s services as an intermediary or
as agents of travel suppliers.
TRAVEL MANAGEMENT
 The players of the Travel Operations Department
are the Manager, the Travel Supervisor and the
Documentation Supervisor, the Travel
Counselors or Counter Staff, the Reservations
and Ticketing Officers, and the Liaison Officer.
TOUR OPERATIONS
 Tour Operations Department is organized along
the concept that tour operations involve both
office activities or office operations and field
operations—one complementing the other in a
manner that the areas of responsibility are
clearly defined.
TRAVEL MARKETS
 A market is the prospective travel consumer of a
travel component or a tour package, at the point
of origin, while the destination is the place to be
visited or experienced within a geographical area
of operation.
Factors that Influence Travel Motive

Regardless of the reason for travel, there are three (3)  Relaxation
basic factors that influence travel decisions and before  Security
considering the various travel motivators, these must be  Love
considered first, since they influence the necessary travel  Achievement
arrangements. These three (3) basic factors are those  Knowledge of self
related to the individual’s differences in age, gender, and  Knowledge
education.  Appreciation of beauty

o Age TRAVEL MANAGEMENT SERVICES

o Gender
o Education
Corporate Travel or Business Travel
 Corporate travel or business travel is sponsored
travel for financial or economic gain and for
representation purposes in private or public
sector events.
 The transformation from travel agents to travel
managers has brought about a refocusing of
what is perceived to be the primary product of
travel management companies, which is the
facilitation of travel related services. While the
traditional role of travel agents is to that of
“order takers” the evolving role of travel
managers is that of “order makers”.

Leisure Travel or Holiday Travel Principal Services

 Leisure or holiday travel is characterized by its  Sale of Air Package

motivators—physical, cultural, personal  Travel Documentation Assistance
interaction and status or prestige—and it’s  Personalized Interaction
basically at one’s own expense.
Other Products and Services
Leisure Travel Motivators
 Rail and Road Travel
 Physical Motivators  Maritime Travel Products
 Cultural Motivators
 Interpersonal Motivators
 Status and Prestige Motivators

Leisure Travel De-Motivators

 Cost of Travel
 Lack of Time
 Health
 Family stage
 Lack of interest
 Fear and safety

Holiday Market Variables

 Socio-Economic and Demographic Variables

 Product-Related Variables
 Psychographic Variables

Traveler’s Psychographic Variables

Need

 Physiological
 Safety
 Belonging
 Esteem
 Self-actualization
 Learning
 Aesthetics
 BUSINESS FINANCE
“PRELIMS”
Introduction:
 Business finance is a relatively new subject. Until
the 1960s it consisted mostly of narrative
accounts of decisions that had been made and
how, if identifiable, those decisions had been
reached.
 Business finance is vital to the business.
Decisions on financing and investment helps
determine its success or failure.
Finance Defined
 Finance is the application of economic principles
to decision-making that involves the allocation of
money under conditions of uncertainty.
 the framework for making decisions as to how to
get funds and what we should do with them
once we have them.
Five Principles of Finance
Cash flow matters.
 Positive Cash Flow, not profits, pays the bills, and
represents money that can be spent and
reemployed to make more money.
Consequently, it is cash flow, not profits that
determine the value of a business.
Money has time value.
 The most fundamental principle of finance is that
money has a TIME value. Simply, a dollar today
has more value than a dollar tomorrow (besides
the effect of inflation).
Risk requires reward.
Investors will only invest if they expect to receive a return
on their investment. They want a return that satisfies two
criteria:
 A return for delaying consumption – no one
would put off the use (consumption) of their
money if they were not to be rewarded by
earning more satisfaction (money) in the future.
 An additional return for taken on risk –
Investors don’t like risk and seek to avoid it.
Risky investments are unattractive UNLESS they
offer the prospect of greater returns.
Market process are generally right.
 An efficient market is one where the prices of
the assets traded in that market fully reflect all
available information at any instant in time.
Conflict of interest cause organization problems.
 Agency problems may result from the separation
of the management and ownership of the
business. Management may act in their best
interest even if contrary to the interest of
ownership.
Role of Finance in business
 Business finance is the study of how these
financing and investment decisions should be
made in theory, and how they are made in
practice.
Strategic Planning and Budgeting
 You define where you want the business to go,
determine the objectives and then ask your
financial people how much it will cost to get
there.
Equity or Loan
 After creating the strategic plan, the finances
turn to the methods of funding a company’s
operations.
Cash Flow Management
 Business owner always wants to know how much
money is in the company’s bank account.
Profit Planning and Cost Controls
 Business owners are constantly reviewing their
financial statements, looking for any expenses
that suddenly get out of line with the budgets.
Managing Unavoidable Risks
 An owner has concerns about the direction of
interest rates, currency fluctuations, changes in
commodity prices and risks that his customers
will not pay their invoices.
Need for and Importance of Finance in Business:
 Business finance means raising capital for
business units and their rational use.
Establishment of Business Enterprises
 Finance is required for the promotion of the
establishment of any type of enterprise.
Efficient Operation of Business
 Finance is the source of business, which cannot
be efficiently operated without finance.
Development and Extension of Business
 Finances are also required for the development
and extension of all business activities of the
modern age. With finances, various commodities
may be purchased or sold or produced.
Sound Business Position
 Finance is the only base point by which sound or
weak position of business is known, reason being
that payments may be made easier to the
suppliers, remuneration and facilities may be
provided to the Employees and payment of
original amount and interest may be paid to the
debtors in time, only when sufficient funds are
available.
Facing Competition
 Advertisement and publicity production and
distribution of new commodities and services,
incentives to the consumers, sale promotion,
providing services and commodities at a fair
price are required, to face present-day
competitors. For all these activities, finances are
required.
For Infrastructural Facilities
 Finance is also required for arranging those
infrastructural facilities which are essential
for business entrepreneurship, although the
volume of required finances may be high or low,
according to the coverage of various Enterprises.
Modernization of Business
 Finances are required for new techniques, new
sources, new machinery, various new products,
and computerization, which are essential for the
modernization and operation of the business.
For Marketing Expenses
 In the modern age, marketing is an important
function of business, the reason being the area
of marketing has become quite wide and that
has necessitated various activities, like
– advertising and publicity, sales
promotion, marketing mix, selection of
marketing intermediaries, distribution of goods,
transportation, warehousing, and marketing
research, etc. For all these
activities, finance’s important needful role for
every business.
Labor Welfare and Social Security
 For the success of any business or enterprise,
human relations between employers and
workers should be cordial. For that,
the entrepreneurs should essentially safeguard
the interests of the employees and workers.
Other Needs and Importance
 Business Finance is required for research and
development, international trade, and the
success of various schemes for Industrial and
business development.
Legal Forms of Business Organizations
 The forms of business enterprise, the objectives
of financial management, and the relationship
between financial managers and shareholders
and other stakeholders.
Important to financial decision-making are:
 Taxation
 Degree of control
 Owners’ liability
 Ease of transferring ownership.
 Ability to raise additional funds.
 Longevity of the business.
Sole Proprietorships and Partnerships
A sole proprietorship is a business entity owned by one
party, and is the simplest of the forms of business:
 It is easy to form.
 The business income is taxed along with the
owner’s other income.
 The owner is liable for the debts of the business.
 The owner controls the decisions of the business.
 The business ends when the owner does.
Advantages:
o The proprietor is the sole business
decision-maker.
o The proprietor receives all income
from the business.
o Income from the business is taxed
once, at the individual taxpayer level.
Disadvantages:
o The proprietor is liable for all debts of
the business (unlimited liability).
o The proprietorship has a limited life.
o There is limited access to additional
funds.
Partnership
 The partnership agreement describes how
profits and losses are to be shared among the
partners, and it details their responsibilities in
the management of the business.
Advantages:
 Partners receive income according to terms in
partnership agreement.
 Income from business is taxed once as the
partners’ personal income.
 Decision-making rests with the general partners
only.
Disadvantages
 Each partner is liable for all the debts of the
partnership.
 The partnership’s life is determined by
agreement or the life of the partners.
 There is limited access to additional funds.
Corporation
 A corporation is a legal entity created under
state laws through the process of incorporation.
 The articles of incorporation specify the legal
name of the corporation, its place of business,
and the nature of its business.
 The bylaws are the rules of governance for the
corporation.
 The ownership of a corporation, also referred to
as stock or equity, is represented as shares of
stock.
To become a corporation, state laws generally require
that a company must do the following:
 file articles of incorporation,
 adopt a set of bylaws, and
 form a board of directors.
THE FINANCIAL SYSTEM
 A strong financial system is vitally important.
When our markets work, people throughout our
economy benefit—seeking to buy a car or buy a
home, families borrowing to pay for college,
innovators borrowing on the strength of a good
idea for a new product or technology, and
businesses financing investments that create
new jobs.
Financial System
 A financial system makes possible a more
efficient transfer of funds by mitigating the
information asymmetry problem between those
with funds to invest and those needing funds. In
addition to the lenders and the borrowers, the
financial system has three components:
 financial markets, where transactions take place.
 financial intermediaries, who facilitate the
transactions; and
 regulators of financial activities, who try to make
sure that everyone is playing fair.
Financial Assets
An asset is any resource that we expect to provide future
benefits and, hence, has economic value. Assets are
categorized into two types: tangible assets and intangible
assets. The value of a tangible asset depends on its
physical properties. Buildings, aircraft, land, and machinery
are examples of tangible assets, which we often refer to as
fixed assets.
The need for financial assets:
Financial assets serve two principal functions:
a. They allow the transference of funds from those entities
that have surplus funds to invest to those who need funds
to invest in tangible assets.
b. They permit the transference of funds in such a way as
to redistribute the unavoidable risk associated with the
tangible assets’ cash flow among those seeking and those
providing the funds.
The Role of Financial Markets
 Investors exchange financial instruments in a
financial market. The more popular term used
for the exchanging of financial instruments is
that they are “traded.” Financial markets provide
the following three major economic functions:
 price discovery,
 liquidity, and
 reduced transaction costs.
Price discovery means that the interactions of buyers and
sellers in a financial market determine the price of the
traded asset.
Liquidity is the presence of buyers and sellers ready to
trade. This is an appealing feature when circumstances
arise that either force or motivate an investor to sell a
financial instrument.
Reduced the transaction cost - when parties want to trade
a financial instrument. In general, we can classify the costs
associated with transacting into two types: search costs
and information costs.
  Search costs in turn fall into two categories:
explicit costs and implicit costs.
o Explicit costs include expenses to advertise one’s
intention to sell or purchase a financial
instrument.
o Implicit costs include the value of time spent in
locating a counterparty—that is, a buyer for a
seller or a seller for a buyer—to the transaction.
The presence of some form of organized
financial market reduces search costs.
  Information costs are costs associated with
assessing a financial instrument’s investment
attributes. In a price-efficient market, prices
reflect the aggregate information collected by all
market participants.
The Role of Financial Intermediaries
 their role in allowing the efficient allocation
for those who have funds to invest and
those who need funds may not always work
as described earlier.
Financial intermediaries accomplish this in a two-step
process:
a. Obtaining funds from lenders or investors.
b. Lending or investing the funds that they borrow to those
who need funds.
Type of Financial Markets
Internal market, which we also refer to as the national
market, is made up of two parts: the domestic market and
the foreign market.
a. domestic market is where issuers domiciled in the
country issue securities and where investors then trade
those securities.
b. foreign market is where securities of issuers not
domiciled in the country are sold and traded. For example,
from a U.S. perspective.
External market. This is the market where securities with
the following two distinguishing features are trading:
a. At issuance the securities are offered simultaneously to
investors in a number of countries.
b. The securities are issued outside the jurisdiction of any
single country. We also refer to the external market as the
international market, the offshore market, and the
Euromarkets (despite the fact that this market is not
limited to Europe).
The Money Market - is a financial market that includes
financial instruments with a maturity or redemption date
one year or less at the time of issuance.
 Treasury bills
 Commercial paper
 Certificates of deposit (CDs)
 repurchase agreement
 Bankers’ acceptances
The Capital Market
 The capital market is the sector of the financial
market were long-term financial instruments
issued by corporations and governments trade.
Here “long-term” refers to a financial instrument
with an original maturity greater than one year
and perpetual securities (those with no
maturity).
The Primary Market
 When an issuer first issues a financial
instrument, it is sold in the primary market. The
primary market consists of both a public market
and a private placement market.
The Secondary Market
 is one in which financial instruments are resold
among investors. Issuers do not raise new capital
in the secondary market and, therefore, the
issuer of the security does not receive proceeds
from the sale.
CENTRAL BANK
Introduction:
 At its most fundamental level, a central bank is
simply a bank which other banks have in
common. Small rural banks might each have
deposit accounts at a larger urban bank to
facilitate their transactions in the city. By these
criteria, a financial system might have several
central banks. More so, a central bank is usually
a government sanctioned bank that has specific
duties related to the performance of the macro
economy. Typically, an “official” central bank is
charged by a central government to control the
money supply for the purpose of promoting
economic stability. It may have other duties as
well, such as some degree of regulatory power
over the financial system, operating a check-
clearing system, or to perform general banking
services for the central government.
 Most industrialized economies have a central
bank. The Bank of England, the Bank of Japan,
the German Bundesbank, and the United States
Federal Reserve are all central banks. While their
organizational structures and powers vary, each
bank is responsible for controlling its nation’s
money supply.
History of the Central Bank of the Philippines
1900
  Act No. 52 was passed by the First
Philippine Commission placing all banks
under the Bureau of Treasury. The Insular
treasurer was authorized to supervise and
examine banks and banking activities.
1933
  Group of Filipinos tried to conceptualize a
central bank which resulted from a
careful understanding of the economic
provisions of HARE HAWES CUTTINE BILL.
February 1929
  The Bureau of Bank took over the banking
supervision.
1939
  A bill establishing a central bank was
drafted by the Finance secretary, Manuel
Roxas and approved by the Philippine
legislature. However, the bill was returned
by the US government, without action, to
the Commonwealth government.
February 1948
  President Manuel Roxas, submitted to
congress a bill” Establishing the Central
Bank of the Philippines, defining its powers
in the administration of the monetary and
banking system, amending pertinent
provisions of the Administrative Code with
respect to the currency and Bureau of
Banking and other purposes
June 15, 1948
  The was signed known as Republic Act No.
265 – The Central Bank Act signed by
President Elpidio Quirino.
January 3, 1949
  The Central Bank of the Philippines (CBP)
was inaugurated and formally opened with
Miguel Cuaderno Sr., as the first governor.
July 3, 1993
  The Bangko Sentral ng Pilipinas (BSP) was
established to replace the CBP as the country’s
central monetary authority.
  Bangko Sentral ng Pilipinas (BSP) is the central
bank of the Philippines. It was established
pursuant to the provisions of the 1987 Philippine
Constitution and the New Central Bank Act of
1993. BSP enjoys fiscal and administrative
autonomy from the National government in
pursuit of its mandated responsibilities.
BSP Objectives, Responsibilities and Functions
 The primary objective is to maintain price
stability conducive to a balanced and sustainable
economic growth, The BSP also aims to promote
and preserve monetary stability and the
convertibility of the national currency.
Responsibilities:
 The BSP provides policy directions in the areas of
money, banking and credit, It supervises
operations of banks and exercises regulatory
powers over non- bank financial institutions with
quasi-banking functions.
Functions:
1. Liquidity management – formulates and implements
policy aimed at influencing money supply consistent with
its primary objective to maintain price stability.
2. Currency issue – has the exclusive power to issue
national currency. All notes and coins issued by the BSP
are guaranteed by the government and are considered
legal tenders for all private and public debts.
3. Lender of last resort – the BSP extends discounts, loans
and advances to banking institutions for liquidity purposes.
4. Financial supervision – supervises banks and exercises
regulatory powers over non-bank institutions performing
quasi- banking functions
5. Management of foreign currency reserves – BSP seeks
to maintain sufficient international reserves to meet any
foreseeable net demands for foreign currencies in order to
preserve the international stability and convertibility of the
peso.
6. Determination of exchange rate policy- BSP adheres to
a market-oriented foreign exchange rate policy such that
the role of the BSP is to ensure orderly conditions in the
market.
The Monetary Board
 The Monetary Board exercises the powers and
functions of the BSP, such as the conduct of
monetary policy and supervision of the financial
system.
 The Governor is the chief executive officer of the
BSP and is required to direct and supervise the
operations and internal administrative of the
BSP.
A deputy governor heads each operating sector as
follows:
a. Monetary Stability Sector – takes charge of the
formulation and implementation of the BSP’s monetary
policy, including serving the banking needs of all banks
through accepting deposits, servicing withdrawals, and
extending credit through rediscounting facility.
b. Supervision and Examination Sector- enforces and
monitor a compliance to banking laws and promote a
sound and healthy banking system.
c. Resource Management Sector serves the human,
financial and physical resource needs of the BSP.
The BSP Security Plant Complex located in Quezon City
houses the bank note printing plant, securities printing and
mint and gold refinery, The banknote printing plant and
mint take care of producing currency notes and coins. BSP
has three regional offices performing cash operations, cash
administration, loans and rediscounting, bank supervisions
and gold buying operations. These are located in La Union,
Cebu City and Davao City and 19 branches in the
Philippines.
Philippine Deposit Insurance Corporation (PDIC) Who should sign the Claim Form?

 PDIC is a government instrumentality created in  If a depositor is unable to file his claim

1963 by virtue of Republic Act 3591 to insure the
deposits of all banks. PDIC exists to protect
depositors by providing deposit insurance
coverage for the depositing public and help
promote financial stability.
 Under the amended PDIC Charter, the
Corporation is mandated to provide depositor
protection and promote financial stability by
providing permanent and continuing deposit
insurance up to the maximum deposit insurance
coverage of Php 500,000.00 per depositor per
bank Public Policy.
Objectives:
1. Depositor Protection -To promote and safeguard the
interest of the depositing public by way of providing
permanent and continuing insurance coverage on all
insured deposits.
personally, a representative may file on his
behalf by presenting a duly notarized Special
Power of Attorney (SPA), or duly authenticated
SPA, or in the case of a depositor residing
abroad, an SPA duly authenticated by the
Philippine Consulate nearest his residence.
What are NOT covered by PDIC Deposit Insurance?
The following are excluded from PDIC deposit insurance,
whether they are denominated, documented, recorded, or
booked as deposit by the bank. Deposit accounts or
transactions that: Are unfunded, fictitious, or fraudulent.
What is the maximum amount of cash deposit insured by
PDIC? Your money is safe kept in the bank and is protected
under the law. All Philippine banks are members
of Philippine Deposit Insurance Corporation (PDIC) and
savings deposits are insured and secured up to a maximum
amount of PHP 500,000 per person.

2. Financial Stability- To strengthen the mandatory

deposit insurance coverage system to generate, preserve,
maintain faith and confidence in the country’s banking
system, and protect it from illegal schemes and
machinations.

Member Banks

 All banks that are licensed to operate

as banks by the Bangko Sentral ng Pilipinas are
mandated to become member-
banks of PDIC. Member-banks are assessed a flat
rate of 1/5 of 1% of their total deposit liabilities
annually.

How to claim PDIC deposit?

 In case of a bank closure the depositor is given 2

years to claim bank deposit.

Prepare the following documents:

  Original evidence of deposits such as savings

passbook, certificate of time deposit, bank
statement, unused checks, and ATM card.
  Two (2) valid photo-bearing IDs with signature
of the depositor/claimant.

Who should sign the Claim Form?

1. DEPOSITOR of the account - for depositors 18 years old

and above

2. PARENT - if the depositor is below 18 years old

3. AGENT - in the case of “By” accounts

4. TRUSTEE - in the case of “In Trust For (ITF)” accounts

5. EACH DEPOSITOR - in the case of joint accounts such as

“Or”, “And/Or” or “And” accounts
 ART APPRECIATION
“PRELIMS”
What is ART?
 Derived from the Latin word “ars” (J.V. Estolas)
 Work of art-visual expression of an idea or
experience formed with skill through use of a
medium
 Oldest and most important means of expression
developed by man
ART
“The use of skill and imagination in the creation of
aesthetic objects, environments, or experiences that can
be shared with others”
4 Common Essentials of ART
 Art must be man made
 Art must be creative, not imitative
 Art must benefit and satisfy man and man must
make use of art in practical terms
 Art is expressed through a certain medium or
material by which the artist communicates
himself to his fellows
ART
 Art can highlight the importance of certain
events to keep them in memory and indulge in
pleasure
 We get a glimpse of the thoughts, feelings, and
beliefs of people who lived in the period.
ART APPRECIATION
 The ability to interpret or understand man-made
arts and enjoy them either through actual and
work-experience with art tools and materials or
possession of these works of art for one’s
admiration.
 “While beauty is in the eye of the beholder, we
must remember that art does not have to be
beautiful to be appreciated”
Subject of Art
Representational Art
 “Objective Arts”
 Artworks that depict something easily
recognized by most
 Painting, sculptures, literature
Non-Representational Arts
 Artworks that do not resemble to any real
subject
 They are what they are
FUNCTIONS OF ART
Aesthetic Function
 Through art, man becomes conscious of the
beauty of nature
 Man learns to preserve them for enjoyment and
appreciation
Cultural Function
 Art transmits and preserve skills and knowledge
from one generation to another
 Tangible Representations
 Intangible Representations
Personal/ Individual Function
 An artist may create out of a need for self-
expression, or gratification.
Economic Function
 Art is an avenue to extend his sense of
belongingness and connection with people.
 Art gathers man as one family and community
Political Function
 Using visual images that portrays political change
was the defining functions of art in the 20th
century
Historical Function
 Art forms serve to record historical figures and
events
 It commemorates great people on history
Religious Function
 Artforms like architecture, music, dance, and
sculpture play an important role in one cultural
spirituality
Physical Function
 Architectural structure like hospitals, physical
therapy center and laboratories are there to
assist us for our health care
 Music and dance
Basic Theories of Art by Different Philosophers
Plato’s Theory of Imitation
 Plato had a love-hate relationship with the arts
 Plato is a great critic of literature, philosopher,
thinker, educationalist and moralist
 World of ideals - This world of perfect forms can
only be reached through pure thought rather
than the senses
 Plato says that art imitates the objects and
events of ordinary life
 For Plato because for him all art forms are
imitative and replica of the IDEA
  Art is an imitation of life “Medium of Visual Arts”
 “Our lives are imitation of the ideal world” + “Art
is an imitation of life” Paintings
 = ART IS AN IMITATION OF AN IMITATION
 Creating meaningful effects on a flat surface
 Mimesis - representation or imitation of the real
using pigments LATIN WORD PINGERE
world in art
 Wet plaster, canvas, wood, or paper
 We are bound to do crazy things because of art
Watercolor
Aristotle’s Theory about Art as Representation
 A painting method in which the paints are made
 Aristotle is known to be a student and disciple of
of pigments suspended in a water-based solution
Plato in philosophy
 Simple and clear
 He believes imitation is in-born instinct to men
and there is a natural pleasure in such imitation Fresco
 For him arts like poetry and literature are
philosophical in nature  A painting method done on a moist plaster
 “Aesthetic Emotion” surface with colors ground in water or a lime
water mixture
Catharsis  “The creation of Adam” by Michelangelo

 Defined as the process of releasing, and thereby Tempera

providing relief from, strong or repressed
emotions  A permanent, fast-drying painting medium
consisting of colored pigments mixed with a
Art for Art Sake or L’art Pour L’art by Immanuel Kant water-soluble binder medium, usually glutinous
material such as egg yolk
 Kant recognized that the judgement of beauty
 Used mainly during the Middle Ages and early
can be universal despite its subjectivity
Renaissance
 Art should be separated from other
considerations like morality, function, and Pastel
pleasure
 Art should stand independently and should be  A stick of dried paste made of pigment ground
free from all the scrutiny of other advantages, with chalk and compounded with gum and water
rather art stands for beauty alone.
Encaustic
The Artist’s Medium
 Known as hot wax painting, involves using
Medium heated beeswax to which colored pigments are
added.
 Latin word “medium”
 These are materials used by artists to interpret Oil
his feelings
 Visual Arts  Most expensive art activities
 Auditory Arts  Pigments are mixed with linseed oil and applied
to the canvas
Visual Arts  Flexibility
 Dries slowly
 Its mediums can be seen, and which occupy
space Acrylic
 Dimensional arts
 Three dimensional arts  Popularly used by contemporary painters
 Does not tend to break easily
Auditory Arts

 Mediums can be heard, or which can be

expressed in time

Combined Arts

 Mediums can be both seen and heard, and which

exist both in time and space